Working at or with 35+ early stage B2B software companies keeps teaching me the same lessons over and over again about going from nothing to market with a product that might turn into a real business. I was challenged to distill it down to 10 points for a talk Crane’s Flight 2020 Early Stage Enterprise Summit. Here they are!
Go to the right market
There is such a thing as going to the wrong market and finding that no one there wants your product.
Product Market Fit is pretty easy. If you can convince people to use or pay for your product because it does something valuable, you have PMF.
- Are you solving the important problem?
- That people will pay to solve?
- For a big market?
- That you can sell into?
- To generate enough sales/growth?
- To buy you time/money?
What people assume, and fail to mention, is that great product market fit — where you’ve really honed in on a hugely value generating product for a particular customer base — can easily lead to a failed startup if 1) the market is not big enough OR 2) you don’t figure out how to expand your market over time.
PMF for a small M is not a business you want to be in.
Your real TAM must be enough
The TAM you use to raise venture capital against is not real. Your real TAM, or what many call a SOM―serviceable obtainable market―is the percentage of TAM you can close and that won’t churn in <1 year.
- Is that enough ARR to raise your next round against?
- Or enough revenue to scale your business with?
- Can you expand that number faster than you burn cash?
It has to be. And you have to.
Learn to sell
You, a founder, have to do sales. You have to know what it takes to sell your product.
How to find the right people, what to say to them, what to show them, how to work around objections, how to help them convince other people in their organization, how to ask for money, how to onboard them, how to deliver a great customer experience. All of it.
Whoever knows how to do that runs your business.
- If that’s not you, then it is not going to be your business.
- If that’s not you, then you’re not going to know whether any marketing hire can get you in front of the right people and convince them to give you a chance.
- If that’s not you, then you’re not going to know whether any sales hire can execute your specific sale to your specific customer.
Here’s a crash course: The founder’s guide to selling. Yes, you have to do sales.
Earn trust every day
Think about how you get your first users or sales. These come from people you directly know, or introductions from friends, colleagues, and investors.
Knowing you, or getting a warm introduction, creates trust and a willingness to listen to you and try your product. That trust can’t be taken for granted.
If you create an open source tool that gets a lot of traction with developers, their usage and stars and PRs and conversations about it, confer trust like a warm introduction.
The first paying customers who let you use their logos, give you quotes, or let you write case studies about them — they’re conferring trust.
You have to earn that trust by creating good customer experiences for them, shipping something valuable, and being decent to do business with every single day.
This trust is what actually bootstraps growth.
Make the customer’s story awesome
Your customer’s story is more important than your story.
Your story is interesting, but what gets customers to buy is some pain in their story and how you’re going to transform that story into a better one. The new story your users and customers can live because of their relationship with you is everything.
I’ve found more often than not that founders are extremely oriented towards themselves and what they’ve built instead of towards their users and the needs those users have. So be careful about believing in the importance of the customer’s story but failing to put that into practice.
Do fewer things better
You’re going to attack 5 use cases in 3 verticals with 2 different go to market strategies? You’ll be mediocre at everything.
You’re attacking 2 use cases in 1 vertical with 1 GTM? You might be competent.
You’re maniacally focused on solving 1 problem for 1 persona to such a degree that it outstrips everything that’s come before by multiple orders of magnitude? 10x customer story improvement.
You have to figure out what you’re good at and become the best at it to create a base to build on. That’s how you buy time, trust, and money to continue.
Own the customer journey
Map out every touchpoint you have a with someone starting from the first time they hear about you and ending when they don’t become a customer or churn after being a customer. Know it inside an out.
You might delegate parts of that journey to different people and teams, but someone has to understand how the whole thing works.
Someone has to make the call about whether your should be spending your limited resources improving the experience in one part of the journey, like onboarding, or ratcheting up an upstream activity like the capacity to do demos.
If you’re the CEO, that’s your job. Take responsibility for every part of it.
Pick the right metrics
Big numbers are not always good. Small numbers are not always bad.
Having a larger volume of bad leads, for instance, creates a ton of work that turns into very little money. You might optimize your entire organization to deal with it. That’s more time spent on creating nurture programs, qualification procedures, marketing campaigns and more SDRs to sift through them and more meetings and demos etc.
It’s also less time spent per lead, a worse experience for each person you interact with, and lot of burned leads who will never come back.
When you could just spend less time, less people, and less money―to make more money with a smaller volume of higher quality leads.
Being focused on how your colleagues and employees do work every day in real life is often the only difference between winning and losing.
If the product doesn’t do what it’s supposed to do, you have to fix that with the product.
If your sales team doesn’t understand your product or customer or do any qualification or disqualification or prioritization of what they work on, you have to fix that with the sellers.
If your marketing team is bringing in the wrong leads, or low quality leads, or pitching the wrong value proposition, or positioning the product against the wrong competitors, or sending business messaging to engineers, you have to fix that with the marketers.
Poor execution in any part of the customer journey can render all your great work everywhere else null and void.
Stay alive long enough to be right
At the end of the day, if you’re right about product and market, sometimes the job is just to stay alive long enough to be proved true.
Category creation takes time. Market education takes time. Culture change takes time.
Don’t lose your way.